Thank you for standing by and welcome to the AllianceBernstein second quarter 2011 earnings review. At this time, all participants are in a listen-only mode. After the remarks, there will be a question-and-answer session, and I will give you instructions on how to ask a question at that time. As a reminder, this conference is being recorded and will be replayed for one week. I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AllianceBernstein, Ms. Andrea Prochniak. Please go ahead.

Thank you, Sarah. Good morning, everyone, and welcome to our second quarter 2011 earnings review. As a reminder, this conference call is being webcast and accompanied by a slide presentation that can be found in the Investor Relations section of our website. On the call today, we have our Chairman and CEO, Peter Kraus; our Chief Operating Officer, David Steyn; and our Controller and Interim CFO, Edward Farrell. Now I’d like to draw your attention to the cautions regarding forward-looking statements on slide two of our presentation. Some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. You can also find our cautions regarding forward-looking statements in the MD&A of our 2010 Form 10-K and 2011 Form 10-Q filings. We filed our second quarter 2011 10-Q this morning. I’d also like to remind you that under Regulation FD, management may only address inquiries of a material nature from the investment community in a public forum. So please ask all such questions during this call. Now let me turn the call over to Peter.

Thank you, Andrea. Good morning, good afternoon, and good evening. Welcome to our second quarter earnings call. Without a doubt, this quarter was a challenging one for us. Uncertainty around European debt questions about the US economy and a flight from risk by US equity investors impacted the market, but also had a significant impact on both our investment performance inflows. Yet even with these challenges, we still made progress in executing our long-term strategy or positioning AB for success. I’m going to walk through our second quarter challenges and accomplishments, David will elaborate further in his remarks, and Ed is going to review the financials. And as always, we will take questions at the end. So let me start. Throughout our businesses, we spent the past two years focused on a long-term strategy to improve the investment performance and restore client confidence; diversify our businesses across channels, services and geographies; develop innovative new products and services for our clients; and achieve greater operating leverage and better financial results. We are doing this by utilizing our firm-wide research talent, a core competency of the firm, and broadening our client offerings worldwide. Our strategy is working, and we’ve made new progress, which we’ll share with you today. Beginning with performance, second quarter brought continued success in fixed income. We also delivered strong performance in equity services like small cap and mid cap growth and value. In fact, these teams were just named manager of the year by Institutional Investor, a terrific achievement for the teams and for the firm. We’ll talk more in a minute about how many of our new strategies have outperformed as well. On the global front, we grew our European distribution platform and expanded our sell-side research footprint in Asia with new analysts that we’ve hired. We…

Thank you, Peter. As with Peter, my goal today will be to convey just how much is going right at AllianceBernstein even as we acknowledge the many challenges we continue to face. So let’s begin with assets under management and flows. As you can see from slide 10, we ended the quarter with AUM of $461 billion, down $16 billion or 3% from the end of the first quarter and up 3% year-over-year. Our average AUM is down slightly from prior quarter and flat versus last year. Gross sales declined by 13% from the first quarter and by about a quarter from the same period last year. And redemptions increased as well, which led to $19.5 billion in net outflows during the quarter versus $14 billion last quarter. Looking at the rolling quarter here, you can see the net outflows increased across all channels in a difficult market environment. Outflows accelerated as the quarter progressed, with June our most challenged month. Let’s turn to institutional flows on slide 12. Gross redemptions were about even with last quarter, yet gross sales declined by 29%. As a result, our net outflows were up by about $2 billion in the quarter. With the sales decline, and I’m now on slide 13, we still increased our pipeline by $2.2 billion during the quarter to $6.2 billion. And that’s with several large fundings as well. Even more encouraging, we built a new business across a number of our strategies. Most notably, we secured an additional $1.9 billion customized retirement strategies mandate from an existing client for both advise on asset allocation and asset management services, which carries a higher fee (inaudible) alone. Beyond that, we had major wins in emerging markets fixed income, in real asset strategy, in real estate, and in global bonds. Our…

Thank you, David. Let me give you the second quarter adjusted financial highlights reported earlier today. Adjusted earnings per unit were $0.35 in Q2. That’s down $0.06 from Q1 and down $0.02 from Q2 2010. Adjusted revenues of $637 million were down 3% from Q1 and 1% versus the prior year quarter. Adjusted operating expenses were down 1% versus the prior quarter and up 1% from the prior year quarter. Our adjusted operating margin was 19.7% in Q2, down from 21.9% in Q1 and from 20.9% in Q2 2010. We repurchased 2.5 million units in Q2 at a cost of $51 million. Year-to-date through June 30th, we bought back 4.6 million units. We will continue to be in the market over the remainder of the year. Let’s take a look at the high level GAAP income statement on the next slide. Our GAAP earnings per unit for the second quarter were $0.34, down $0.08 versus the prior quarter and up $0.03 from the second quarter of 2010. Quarterly net revenues of $728 million were down 4% sequentially, but up 6% versus the prior year quarter. Operating expenses of $612 million were down 1% from Q1 and up 5% from Q2 2010. Operating income of $116 million was down 16% from Q1 and up 7% from Q2 2010. Our effective tax rate in Q2 was 7.1%, consistent with Q1 and still a good proxy for our full year projection. Now I’ll review our quarterly revenues and expenses in more detail. Looking at the revenue components, you can see that the largest variance in Q1 came from an investment gains and losses line, which declined $15 million in the quarter. Here we saw current quarter investment losses in fee capital and deferred compensation related investments as compared to prior quarter gains. Base…

Thank you, Ed. Sarah, we are ready for questions now.

(Operator instructions) Your first question comes from the line of Marc Irizarry from Goldman Sachs. Your line is open. Marc Irizarry – Goldman Sachs: Great. Thanks. Peter, I don’t know if you can comment maybe a little bit on the recent activity that you’ve seen on the institutional side just given some of the uncertainty out there and sort of the demand for absolute versus relative investment products.

Good morning, Marc. I think that the institutional demand is, as you put it, rotating a bit from traditional long only products into alternative products. I’d say rotating a bit because there is still a significant demand for traditional institutional long only services. I don’t think that the institutional demand is going to, in dollars, shift that much, but of course it doesn’t take much of a shift to actually have a meaningful impact in the alternative business. So that’s been the reason why we focused on it and I’m sure that’s the reason why others in the industry are also focused on it.

Sarah, do we have other questions?

Your next question comes from the line of Cynthia Mayer from Bank of America/Merrill Lynch. Your line is open. Cynthia Mayer – Bank of America/Merrill Lynch: Hi. Couple questions on private client I guess. It looks like the outflows and redemptions are larger than usual there. And I’m wondering if that is tied to any particular type of client or tied to any particular strategy or if it’s sort of across the board? And also I guess on that note, can you give us specifics on how DAA is performing year-to-date, what the comparative performance is in terms of percentage and maybe sharp ratio or something volatility-related? Thanks.

Sure. Let me comment on the first question, which was is there any pattern to where we’re seeing redemptions or activity in private client business. And Cynthia, the answer to that is yes. It continues to be most vulnerable. We’re seeing greatest vulnerability at the sort of institutional end of the private client business. In other words, the larger single service mandates, which quite are institutional in character, and often by the way have consultant involvement. And that distorts the picture. It is also one of the reasons why the revenue decline or the impacts in revenue is so muted because it tends also to be much lower fee compared to the average group of business. I’d have to come back to you with the sharp ratio on DAA for year-to-date. What I would say is while we never launched DAA and sold – or introduced it to our clients primarily as a source of offer. It was designed as a way of handling tail risk and smoothing the ride of a portfolio for a private client. In fact, since inception, it has delivered offer. But more importantly, much more importantly, what it allows clients to do is have a greater exposure in the equity markets with a higher degree of comfort. But I’ll come back to you with the sharp ratio performance to date.

Your next question comes from the line of Chris Spahr from CLSA. Your line is open. Chris Spahr – CLSA: Just a quick question. Peter, in the past you’ve talked about how some of the poor performance in 2008 would be rolling off and you see a big pick up in relative performance. Do you still expect that?

We still believe that the poor performance in 2008 obviously will roll off. That’s just time sensitive. It will improve our competitive rankings. And we won’t know until we get to the end of the year exactly what that will look like, but we do know that for certainly a period of time our competitive rankings for our major products will improve. Chris Spahr – CLSA: Okay. When I’m just looking at, say, slides 31 and 32 on the index, I just see the institutional – the value and growth. I do see a positive delta. I mean, I guess hopefully we’ll continue – for you guys, for your sake, will go towards positive overall by the end of the fourth quarter?

By the end of the fourth quarter, we will have in the major services a positive impact on the 2008 rolling off. Chris Spahr – CLSA: And have you had discussion, say, within your private clients or institutional clients like the expectations? Do you think they will have a change in perception for Alliance? Do you think this can change how they view your business?

I’m going to comment on broadly on the institutional space. I’m going to let David give you some more details. But every private – every institutional client I have spoken to is well aware of our track record and recognizes that ’08 is going to improve the comparative statistics. But frankly, I think they are as focused on our last 12 months and current performance as that affects, meaning the ’08 rolling off. And the clients that are comfortable with us today and/or giving us money today believe that the strategy that we’re following, which I talked about, fundamental long-term value characteristics of both growth and value are exposure and factors that they want in their portfolio. And that’s what’s driving client retention and additional sales.

Indeed the great latent performance potential in the portfolio is today. On the private client side, I don’t really think private client, if I could generalize, will look at three-year numbers in a way that the consultants or the institutional community do. I would say the private clients – the typical private clients, it is a balance between how you are doing against your competitors but also how you are doing on an absolute basis and indeed whether you are going to meet their spending needs and their income needs. I think in a way it’s a much more subtle equation. So I don’t think the three-year numbers would make a material difference one way or the other to the private client business. Chris Spahr – CLSA: Yes. That was just actually more in reference when you said the institutional-like size of the private client.

I think I’d endorse what Peter has said, I think it will be great our institutional and our respondents in same way. Some will respond positively and some are little through this numbers to past 12 months and more importantly – most importantly, about what they expect to get over the next 12 months. Chris Spahr – CLSA: Okay. Thank you.

Your next question comes from the line of Bill Katz from Citigroup. Your line is open. Bill Katz – Citigroup: Thank you. And good morning, good afternoon, everyone. Peter, you mentioned in your opening remarks you sort of focus on improving the profitability of the company. If you look over the last five or so quarters, the margin has been generally flat to trending down a little bit on an adjusted basis. Just sort of talk about the initiatives if any you might be pursuing to potentially boost profitability for the firm.

Well, Bill, we have been very focused on trying to reduce our occupancy expense. And you know that there was a charge last year that intended to do that. We continue to be hard at work on that. Occupancy expense was a large part of the, I’ll call it, fixed G&A expense at the end of 2008. And we know that we’re going to see that decline in the next year. We also have been very focused on keeping the balance of technology and operating expenses at a constant and declining percentage of revenues. And we continue to be focused on those areas, both creating efficiencies within our systems and locating personnel in places that are less expensive for us to operate in and more efficient for us in reducing the scale of those activities so they better fit our business footprint today. So we’re going to continue to focus on that, and I think you will continue to see the benefits. Now, of course, when you have even modest declines in the revenue line, which we had in this quarter, that has an impact on margin because you can’t always take those bigger expenses down in the quarter. So I think that that margin effect that you saw this quarter is due much more to the revenue effect than it is to our slacking off somehow on the expense side. Bill Katz – Citigroup: Okay. I wasn't inferring you were slacking. The other question is just from a tactical perspective, can you quantify the seasonality of the promotion spend? It’s hard to see it year-on-year. So I’m just trying to see it sequentially.

Yes. Bill, this is Ed. In the second quarter, we hold a fair amount of client conferences. The private clients have their annual meetings throughout the country. There are many of those, and our sell-side conferences also take place in the second quarter. Both of those actually boosted up the expenses in the second quarter. We had seen some increased travel activity by our marketing folks, but that’s coupled with an increase in, as I mentioned earlier, rate increases in both airfare and hotel that have driven up the cost. We expect that will probably continue a little bit for the remainder of the year, but people are very, very focused in on travel.

One other matter that probably affects the margin bit, Bill, as we have gone through the year, that’s if you look at year-over-year, we’ve actually increased our investment spend; we bought our new services; we’re building new activities. And that increases the comp to revenue spend a bit. And that obviously is an effect of the margin. We obviously believe that those investments are relevant to the future. And I think, as Marc Irizarry asked at the beginning, where institutions are leaning to in terms of incremental flows, it’s in the alternative space and that’s where this investment is focused. Bill Katz – Citigroup: Okay. All right. Thank you.

Your next question comes from the line of Campbell Anthony from Macquarie. Your line is open. Campbell Anthony – Macquarie: Hey, Peter. Just on the fixed income business, I would describe your performance is pretty stellar and across a wide range of products. Now, despite that, we’ve seen a very strong industry inflows and you guys have seen pretty lackluster flows. What would you credit that to?

Well, I won’t characterize your observations of our lackluster flows in the industry being great. That’s necessarily my view. I think that we’ve been able to grow our fixed income activity ex the institutional business, which grows more slowly, I think reasonably handsomely. And the revenue increase in fixed income, which I must say I focus on a bit, has obviously grown pretty handily as well. And now it’s the point of the slide that we tried to show you from the end of ’08 till now. Some of that is performance, but in fixed income, actually performance has not been that significant. Most of that is flows. Campbell Anthony – Macquarie: Okay. Thank you very much.

I guess I can’t give you – I haven’t done a study of other people’s flows. I don’t really know what’s in their numbers. But when I look at our earnings growth, our revenue growth in the business, that’s what resonates with me. Campbell Anthony – Macquarie: Okay. Thank you very much.

Your next question comes from the line of Michael Kim from Sandler O'Neill. Your line is open. Michael Kim – Sandler O'Neill: Hey, guys, good morning. First, I know it’s a bit difficult to generalize, but can you just comment on where you stand with the consultants across maybe some of your bigger strategies and whether you’ve seen any more kind of meaningful changes, let’s say, in the last few quarters?

Let me try and answer that. And you’re absolutely right. It’s impossible to generalize. It’s not impossible to generalize across asset classes. It’s impossible to generalize across our consultants. There’s been no meaningful change in the past quarter or two. If you went back a – little bit further back, as you would have expected, the consultants downgraded by and large our global equity services. And then we began to categorize [ph] the traction from our global and other fixed income services. No change in our pattern, but nothing material in scale either. Michael Kim – Sandler O'Neill: Okay. And then secondly, now that a good chunk of your private clients are using the DAA overlay and you won some mandates on the institutional side, just curious if you could give us some color on kind of the economics of this product and how they might compare to maybe the more traditional fee rates?

Look, DAA is a bundled product, if you will. And it’s got a very attractive cost income ratio. And we think that it’s growth will be on the margin, actually quite attractive to the firm. So we look forward to the continued growth of DAA because it will have a financially positive impact on the firm. Michael Kim – Sandler O'Neill: Okay. Thanks for taking my questions.

(Operator instructions) And your next question comes from the line of Cynthia Mayer from Bank of America/Merrill Lynch. Your line is open. Cynthia Mayer – Bank of America/Merrill Lynch: Hi, thanks for the follow-up. I just have a question just want to be reminded of a question on investment process. I think in the past Alliance has used quant process as a way to screen or filter stock picks along with fundamental. And I’m just wondering if that’s still the case. Have there been any changes in that? And maybe you could just remind us how – does that have anything to do with the underperformance in large caps and maybe you could just remind us of how quant and fundamental interact there?

Sure. Our quantitative tools that we use in both the equity area and fixed income area remain robust and important to the process. We continue to upgrade those tools and/or add new elements to those tools in the places in which we think they would bear fruit. We are absolutely an infusion of fundamental analysis and quantitative tools. I wouldn’t characterize the quant tool as a front-end screen. It’s much more important than that, and it’s much more integrated than that. I would characterize the use of the quantitative tools as consistent. We’ve been doing it for a very long period of time. And we continue to evolve quantitative tools just like we continue to evolve fundamental analysis. I think the reason for underperformance, which is what I said in my comments, is if you had to encapsulate it in one comment, our focus on long-term value trends, which right now the market is not rewarding. We know we own securities in the equity side. We keep cash flows and value, for example, or unrecognized growth potential in growth stocks. And those stocks are not being valued the way we think they should be relative to the market. We’ve done that for 40 years, and we know that over that time period it produces results. We think it’s the right thing for clients. We’re going to continue to do that. Recognizing today that when we are in this macro environment where macro factors have a significant impact on valuation that that strategy may underperform. As David said, our clients are looking at what’s in it in the next 12 months. And when they look at that, they would prefer to own those factors than not. Cynthia Mayer – Bank of America/Merrill Lynch: Got it. Thank you.

Sarah, do we have any other questions?

You have one more question from Bill Katz from Citigroup. Your line is open. Bill Katz – Citigroup: Okay. Thanks for taking my follow-up. Ed, just another few. As you think about buyback versus unit count, on a go-forward basis, would you expect the share count – unit count to trend lower, or are there some options on the stock-based comp that would offset some of the buyback?

I would expect, Bill, that we would continue at the same rate, if not, we’d exceed the first half. Bill Katz – Citigroup: That’s in terms of the repurchase –?

Repurchase, yes. Bill Katz – Citigroup: Okay. But in terms of the actual unit count, would that drift lower in light of that or would that stay steady?

No, that would drift somewhat lower, and then we come to the end of the year and we would also then be making our deferred compensation awards. So that would – it's still too early to say what that would be. Bill Katz – Citigroup: Okay. So it’s really more of a maintenance to offset the drift?

Yes. But I would see some incremental buyback even with the deferred compensation plan.

Bill, our – the difficulty for us answering that is we don’t know how many units we’re going to issue at the end of the year. So I think what Ed is saying is we’re going to be consistent in acquiring shares of the market and take advantage of what we think is a sensible thing to do. But as the net effect on that, we won’t go into the end of the year. Bill Katz – Citigroup: And the bigger question associated with that is, just step back and talk about the alternatives business. I know you’ve had a couple tactical additions more recently. But just from a big picture perspective in an effort to maybe jumpstart or overcome the more traditional size of the business, any thoughts of a more sizable transaction to perhaps infuse a little bit better flow dynamics to the business?

I’ve said, as you know, a number of times that we’ll be opportunistic in what we acquire. We don’t have any plan to do any major transaction. And we wouldn’t comment if we did. But I think acquisitions are challenging, and we’re going to do them where they make sense. And where they don’t, we won’t. Bill Katz – Citigroup: Okay. Thanks for taking my questions again.

Your next question comes from the line of Marc Irizarry from Goldman Sachs. Your line is open. Marc Irizarry – Goldman Sachs: Great. Thanks. Just two quick follow-ups. Peter, can you just hit on the private client flows for a second, just sort of the dynamic there ? And do you see sort of the second quarter trends as sort of an aberration or is there a change in sort of risk aversion, if you will, in that channel? And then secondly, what’s the – when you think about the longer term operating margin opportunity for the business, without making sort of any other sort of resizing of the cost base, what do you think the operating margin potential is in the business?

Okay. Thanks, Marc. Those are good questions. Look, on the private client flows, I think in the second quarter, as David said, we had some institutional-like outflows that affected the net number, which you have to sort of look at the history of the business and your conclusion would be is that’s less likely to happen as you go through time because we just don’t have that many of those kinds of accounts. So I think the second quarter reflected that. I don’t think the private client business is reflecting a greater risk aversion, but I also don’t think the opposite is true that private clients are necessarily allocating more assets to risk right now either. I think their risk appetite has remained unchanged and generally relatively conservative. But I do think the second quarter for us was a little bit off the normal path because of those institutional-like accounts that terminated in that quarter. On the operating margin side, I think we’re trying to structure the firm, we’ve got a significant amount of upward leverage or increased leverage on the margin because the marginal margin of revenues in the business is quite high relative to the average. And we believe that – and it’s part of the reason why we tried to show a large part of the firm that’s going. And whether that’s growing from new flows or appreciation, it has the same effect that that growth and the margin of that growth is actually quite high because it doesn’t take more expenses – fixed expenses to grow that. And so we think over time the operating margin has a significant amount of upside in it. And that’s why we think the business is attractive. Bill Katz – Citigroup: Great. Thanks.

There are no further questions in queue.

Thank you, everyone, for participating in our conference call. Feel free to contact Investor Relations with any further questions you may have from here. Thanks, and have a great day.